Lower-income earners are the most impacted
Evidence for 2022 suggests that rising inflation is causing real wage growth to dip into negative figures in many countries.
The increasing cost of living has the greatest impact on lower-income earners and their households. This is because they spend most of their disposable income on essential goods and services, which generally experience greater price increases than non-essential items.
Inflation is also biting into the purchasing power of minimum wages. Despite nominal adjustments taking place, the real value of minimum wages is quickly eroding in many countries.
Wage employees lost six weeks of wages due to the COVID-19 crisis
The erosion of real wages comes in addition to significant wage losses incurred by workers and their families during the COVID-19 crisis.
Data from some 30 countries covering all regions and income groups show that, on average, wage employees lost about six weeks of wages during 2020-21. The loss was larger among women, workers in the informal economy, low-paid workers and workers in low and middle-income countries.
Minimum wages and social dialogue are key to maintaining wage workers’ living standards
There is an urgent need for well-designed policy measures to maintain the purchasing power and living standards of wage workers and their families.
Adequate adjustment of minimum wages could be an effective tool, given that 90% of ILO Member States have minimum wage systems in place.
Strong social dialogue, including collective bargaining, can help to achieve adequate wage adjustments during a crisis.
